Adviser for Belfast-based Carrington Wealth, Steve Laird, explains how one provider's poorly-worded paperwork lost him a client's trust and lost her a tax efficient return on her savings.
This client had been coming to me for ten years. She was an elderly lady in her 80s who had been a teacher. Her husband, who had also been a teacher, passed away before I began advising her.
The pair had been childless and so had accumulated a good sum in savings.
My client and I had become good friends.
Things clients say #6
She had £250,000 invested in ten or more ISAs. It had been invested this way for years but,as she got older, she began to find the related paperwork confusing.
Little did I know that paperwork she would shortly receive from a provider would be so confusing that she would conclude, wrongly, that I was stealing from her.
The paperwork completely destroyed the excellent relationship we had established.
Anyway, to simplify her ISA investments, we decided to invest her money into three multi-manager funds with a single provider. These delivered more of the diversification she wanted, and in a simpler way.
I don't want to name the provider, but as this client received her documents from the company with a contract note from the fund manager stating what I was being paid, she became alarmed.
The provider's wording was ambiguous.
Although it stated accurately that we had received a 2% transfer fee up front, it also stated that the agreed trail of 0.75% would be paid to us monthly.
Now this 0.75% was a per annum figured to be paid over 12 months - but she interpreted the statement to mean we were taking 0.75% per month, or 9% in total.
She was elderly and more anxious than she had been.
I was working in Spain at the time and she voiced her concerns to one of my colleagues. She and I subsequently had a long phone conversation, but there was no convincing her and she told me she didn't trust me any longer.
It was very sad, she had given gifts to my children, and been a good friend. Perhaps it was because we had had such a good relationship that she was so upset by the paperwork she received. Perhaps she thought I had been stealing from her for years.
She subsequently cancelled all the transfers and received £250k in cash because it couldn't be returned to the original ISAs. I understand that she put all the money into a National Savings account delivering a terrible return.
I complained to the provider, pointing out the ambiguity in its documentation had lost me a client.
It was a lose-lose situation. There was nothing I could have done to resolve it.
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